Stock markets are buoyant as the prospect of a US rate rise recedes. Unicredit surges as it eyes a controlling stake in Commerz

(Il Sole 24 Ore Radiocor) - European stock markets continue to rise and are trading at their daily highs. The indices are gaining momentum as US labour market data – showing fewer jobs created (+57,000) and the unemployment rate falling to 4.2% – makes an imminent interest rate rise by the Federal Reserve less likely. Consequently, the FTSE MIB in Milan, which has returned to above 52,000 points, and the CAC 40 in Paris, the DAX 40 in Frankfurt, the FTSE 100 in London and the IBEX 35 in Madrid, whilst the AEX in Amsterdam. Investors are, however, assessing the impact of the latest rotation away from the tech sector, which has held back share prices in the sector in New York and Asia. Meanwhile, the price of oil has hit a four-month low after US President Donald Trump described the US-Iran talks in Qatar as ‘very positive’.

Wall Street is trading higher following a weaker-than-expected jobs report. The June report showed an increase of 57,000 jobs last month, which was below the 115,000 forecast by economists surveyed by Dow Jones. The unemployment rate, however, fell to 4.2 per cent; economists had predicted that the rate would remain at 4.3 per cent. The yield on 2-year Treasury bonds fell following the release of the data, fuelling speculation that the Federal Reserve will refrain from raising interest rates under these circumstances.

Buying in UniCredit on the Milan Stock Exchange on the eve of the end of the supplementary acceptance period for the public offer for Commerzbank. Although the bank will not announce the final results of the offer until 8 July at the earliest, the market is beginning to consider the possible scenarios. In a recent report, Mediobanca analysts emphasise that the acceptances already announced put control of Commerzbank within UniCredit’s reach. This could result in ‘the appointment of 10 out of 20 representatives (including the chair, with a double vote) of the shareholders on Commerzbank’s supervisory board and the consequent ability to appoint management to implement the Unlocked strategy, with the likelihood that the necessary costs and investments will affect the level of dividend distribution and thus also impact minority shareholders, potentially leading to a reduction in remuneration for Commerz shareholders’. Following the closure of the public offer, experts estimate it will take 3–6 months to obtain all the necessary authorisations, during which time the Italian bank will not be able to purchase any further shares. Once the ECB has given the go-ahead to exceed the 30 per cent threshold, UniCredit will instead be able to freely purchase shares on the market without this giving rise to any obligations towards the other shareholders. Alternatively, Piazza Gae Aulenti may acquire shares off-market or through other derivatives; in this case, if the transaction takes place within 12 months of the closure of the public offer, it will have to compensate in cash for any price difference solely to those Commerzbank shareholders who had tendered their shares in the offer. Finally, once 12 months have elapsed, UniCredit may also launch a new offer without any specific obligations.

Among the leading Milanese shares, the defence sector performed well following the latest heavy Russian attack on Kyiv: Fincantieri gained over six points and Leonardo more than four. Stmicroelectronics is down in line with the weakness of the entire EU sector (the Stoxx sub-index is down 1.87%) after Meta’s announcement regarding the possible sale of excess computing power fuelled doubts about the outlook for demand. Bene Amplifon with a rise of over 4 points, building on the previous day’s gains and buoyed by Equita’s ‘buy’ recommendation. Positive Inwit and Unicredit, whilst weakness in the tech sector is weighing on Stmicroelectronics and Prysmian, which is tracking the sector in light of the electrification needs of data centres for artificial intelligence. Trading on Nexi following previous gains.

The spread between BTp and Bund bonds remains stable. The yield spread between the benchmark 10-year BTp and the German Bund of the same maturity stands at 79 basis points, the same level as at the close of trading the previous day. The yield on the benchmark 10-year BTp has risen to 3.68 per cent from 3.66 per cent in the previous reading.